Next Tuesday, President Obama will deliver his sixth state of the union address. He is expected to focus on small steps the government can take to start restoring the widely-shared prosperity that our economy used to provide, before a tiny sliver began capturing all of the fruits of rising productivity. Three years after the Great Recession officially ended economic growth is back, stocks are back, corporate profits are back. But, employment, wage growth, and job security are not. Worse, this situation caps a 40-year trend of stalled median wages that doesn’t even take into account the millions of workers that, starting in about 2000, have dropped out of the labor force altogether.
We’ve talked about some of this before (here and here, for example). But, we’ve never focused a whole meeting on solutions. Maybe that’s because it’s so daunting to figure out ways to improve pay in private markets where most Americans make their livings. Or, maybe it’s because we don’t do solutions in this group. Anyway, Obama’s speech gives us a good opportunity to discuss whether and how to use public policy to raise wages.
Monday I’ll open a little longer than usual because I want to describe the problem clearly and explain enough details about what Obama is expected to propose that we can discuss them intelligently. I’ll also mention, but not rebut, the main arguments of those that argue that raising wages through government policy can’t possibly work without harming our overall economy. As you can see from the discussion questions below, this can be a kind of a theory of everything topic. My idea to avoid this by focusing on the Obama proposals, one by one. But, we can go big and do a government is benevolent / inherently useless discussion if you really want to.
Discussion Questions –
- What? Are low wages really such a problem for many Americans? Which ones? Low compared to what: To the economic value they produce? If so, why aren’t they paid accordingly? If not, are wages the problem or is it something else?
- Why/ Causes. Also, are these causes “natural” to a modern economy, to the workers themselves, or did we do this to ourselves?
- Solutions? What could be done – without reducing job growth or s screwing up economy and misallocating resources?
- SOTU Proposals? What will the president propose? How will he justify them?
- Objections? What are the main objections to these proposals (that don’t fit on ideological bumper stickers)?
Links – (A very broad topic. Read the topics that interest you.)
The Problem –
- [Update, Here’s a must read, because I’m so furious researching this! Also, this: Corporate profits are at a post-War high directly because wage growth is near a post-War low.]
- Average Americans’ wages have been flat for 40 years – even as their productivity has skyrocketed. Recommended.
- One in four Americans working in low-wage jobs. Seven of ten of the most common jobs pays under $30,000. Recommended.
- More, in charts: An overworked and underpaid America.
- A conservative rebuttal: No, worker compensation has almost kept pace with their value, if one measure it right.
- I will rely a lot on this study of the problem.
- [SOTU proposals: I will post if details available before our meeting.]
- Minimum wage:
- An alternative to raising the minimum wage.
- Revive labor unions so workers have more bargaining power.
- No. Just focus on education. Better train mid-skill workers, like we discussed
- Mike is right! Getting back to full employment is the answer.
NEXT WEEK: A post-SOTU topic. The Good, Bad, and the Ugly Of a 2-Party Political System.